The merger of the biggest French broadcasters has collapsed due to competition concerns, dealing a blow to efforts to consolidate the European television market.
TF1, owned by Bouygues, and its smaller rival M6, controlled by German media group Bertelsmann, withdrew their merger request on Friday after the French competition authority raised wide-ranging objections.
To get the clearance, the companies were recently told by officials that they would have to, at a minimum, sell the main channel M6 or TF1, a step Bouygues and Bertelsmann say renders the whole deal unviable.
In a joint statement, the companies said they “therefore conclude that the proposed merger no longer makes strategic sense.” “The parties regret that the Competition Authority did not take into account the speed and scale of the changes that are disrupting the French audiovisual sector”, adds the press release.
The tie-up between TF1 and M6 has been watched closely across the EU as a test case for deals between major national broadcasters, who are desperate to gain momentum to strengthen their position as TV audiences traditional declines.
Bouygues and Bertelsmann had acknowledged that the TF1-M6 merger had pushed the boundaries of competition law, but had argued that it was time for regulators and politicians to recognize the fundamental changes in media caused by the rise of advertising digital and streaming.
To address objections raised during the merger review process, Bouygues and Bertelsmann offered solutions to address concerns that TF1 and M6 control more than 70% of the free TV advertising market in France.
They also argued that regulators should expand the “relevant market” used to assess the impact of the deal to include both TV and online advertising, which would then make the combined group’s market share less problematic. .
France’s competition regulator has not agreed that the rise of video streaming means existing rules should be ignored. “Changes in consumer behavior. . . do not make it possible to consider that television advertisements and online advertisements are sufficiently interchangeable from the point of view of advertisers”, declared Benoît Cœuré, the president of the Autorité de la concurrence.
Authorizing TF1 and M6 to merge “would have created a strong risk of an increase in the price of advertising space to the detriment of advertisers and consumers”.
Failure to obtain clearance is a setback for Bertelsmann chief executive Thomas Rabe, who has committed Germany’s largest media group to a strategy to create national media champions across Europe .
He told the Financial Times last month that a negative decision would have “profound” consequences for the television industry, adding that it would be “very difficult to reach a similar agreement in Germany and other countries”. Rabe has long expressed interest in bringing together RTL in Germany and its rival broadcaster ProSiebenSat. 1.
After the decision to halt the merger on Friday, Bertelsmann said it remained “firmly committed” to the strategy of creating “national media champions”.
“Bertelsmann does not share the position of the French competition authority and sees it as a missed opportunity for the French media market in competition with global platforms.” the company said.
The planned merger between TF1 and M6 has also been seen as a test of the influence of billionaire Martin Bouygues, whose family controls the telecom construction conglomerate. The group has long maintained close ties with the State through its roads and construction activities, which often rely on public contracts. Another influence comes from TF1, which broadcasts the most watched evening news in the country.
Additional reporting by Javier Espinoza in Brussels